Bank Reconciliation

ClearRec is software that reconciles your bank accounts to your accounting system.  It is a robust, easy-to-use, standalone bank reconciliation program for both experts and beginners.


Three reasons to use ClearRec

Built for flexibility: requires no database nor a constant connection to a website. You create files and save them where you see fit just like other desktop programs.

Has tools required by experts: designed with the bank reconciliation expert in mind. The features include autoclearing, advanced search, splitting batches into details, etc.

Integrates with MS Excel™: much can be done within Microsoft Excel™. It allows taking advantage of existing Microsoft Excel™ skills and familiar features.

 

Video: Introduction to ClearRec

 

Top Ten Improvements for your Bank Reconciliation

Many office workers assigned the task of a bank reconciliation suffer in silence with this often difficult task. A bank reconciliation in accounting often presents many challenges to even experienced accountants. Many do not realize that changing a few strategies can dramatically alter their workload. They think reconciling a bank account is just a matter of “getting in there and doing it”. No, unfortunately. Reconciling a bank account benefits from planning and a disciplined process. So, how do you plan for a clean financial accounting bank reconciliation?

Time can be saved reconciling the bank account by applying some well-worn tips. Along these lines, here are ten tips for dramatically improving the reconciliation of bank accounts:

1. Do not do the bank reconciliation manually

This is the most important piece of advice for bank recs. Because the concept of a bank reconciliation accounting is simple, many people assume the process to reconcile a bank account should be simple too. With the vast increase in difficult reconciliation issues like credit cards, bank reconciliations have become almost impractical without the use of a computer program to aid in the process to reconcile bank accounts.
I often hear accountants describe maintaining standards or properly formatting a reconciliation bank to book report as a reason to keep things manual. In other words, a computer just does not produce the report to their satisfaction. The report can be easily modified from the computer. The familiarity of a manual process is not a good reason to avoid a computer bank reconciliation system.

2. Use a step-by-step process

Many users try to take a piecemeal approach to performing a bank reconciliation. They will start comparing a bank statement to a print out of the cash ledger and hope they can uncover the differences. For a bank rec with more than twenty items, this is just impractical. The process to reconcile a bank account requires a disciplined step-by-step approach. Here are the steps for a bank account reconciliation:
Step 1 – Make sure you have an accurate prior bank reconciliation to start. In other words, if you are reconciling April, you should make sure March was a competent reconciliation. You will need March’s outstanding items to move forward with April. Check the beginning accounting system balance to make sure it has not changed since the last reconciliation. If your prior month reconciliation does not work, your current reconciliation will not work either.
Step 2 – Gather all transactions that describe the changes between the beginning balance and the ending balance on the accounting system. This is essential to reconcile bank accounts.
Step 3 – Gather all transactions that describe the changes between the beginning balance and ending balance from the bank statement(s) and website.
Step 4 – Match each transaction by carefully numbering each match. You may have to backtrack. So this is important. This becomes the all important audit trail. A competent program specializing in a bank recon does this automatically.
Step 5 – Update any changes/corrections to the accounting system discovered during the banking reconciliation and verify that the ending balance of the accounting system matches your banking reconciliation.
So when do we have bank reconciliations accounting by a non step-by-step approach? Only in limited circumstances with fewer than 20 transactions.

3. Split out transactions that are giving you trouble

Transactions that show up in your accounting system and represent multiple items can be trouble to match to bank items. Take those over summarized amounts and break them out into smaller pieces. For instance, if your accounting system shows an amount on April 3rd that represents ten credit card entries and it is not matching anything on the bank statement, replace that amount with the ten detail credit card entries so that you can better match them up on the bank statement.

4. Use a computer program that will allow you to sort transactions

You will find that being able to sort the list of transactions is valuable in discovering how to match them. There are times when sorting by date is important. Other times, sorting by amount is important. Microsoft Excel will do this but dedicated bank reconciliation programs do this more succinctly for a bank account reconciliation. A bank account reconciliation specifically benefits from a dedicated computer program because of the added tools and the step-by-step approach.

5. Isolate yourself as much as possible during a bank reconciliation

It may not be practical to isolate yourself during bank recs. If you can, it will measurably improve the quality and time it takes to do reconcile bank accounts in most cases. Some people come to the office early. Others will close and lock and office door and put a sign on it. If this is not possible, doing the bank reconciliation during a low activity day (if it exists) is recommended.

6. Start with the easier matches first

Many people like to start with the hard matches first to “get them out of the way”. Doing so will make the bank account reconciliation take longer in many cases and may even cause you to give up. Clearing the easy items will give you momentum. As well, the harder items tend to get easier with less transactions surrounding them. In other words, if you‘ve matched all April 3rd transactions except two, you have less combinations to guess.
A reconciliation bank account can have both easy matches and difficult ones. Getting rid of the easier ones first will allow the harder ones to be discovered. As an example, think about a jigsaw puzzle. Usually, the easier pieces are fitted first. The harder ones are kept away until the puzzle is almost complete. The same applies to managing a reconciliation bank account. You will often hear reconciling bank accounts being compared to jigsaw puzzles because the mindset of solving them isr so similar.

7. Use subsystem reports

Many people get stuck when a mysterious transaction has no match anywhere when having to reconcile a bank account. Many times they just have not printed the right report from the accounting system. Perhaps the billing system will allow you to break out an amount that has been troublesome to match. As well, some accounting systems will help you break out a summarized entry by clicking on a live report. More detail is generally better in a banking reconciliation.

8. Do one bank recon at a time

Sometimes people want their reconciliation of bank accounts to be done by combining several months at once to “get it done quicker”. This almost never works. Typically it causes a mess and requires you to start from scratch. The problem with this method of bank account reconciliations is that it relies on less information than a period by period approach. In other words, you are not making use of beginning and ending balances along the way to guide your progress. It is almost always better to use the smallest period possible when a bank recon is difficult. Usually, month by month is the most practical method for bank reconciliation accounting.
As well people try a “banks reconciliation” approach meaning they try to combine them into one grand reconciliation. Some bank account reconciliations require some combination of accounts (called a “consolidated” account). In those cases, you do need you bank account reconciliations to be combined. Most of the time, however, it is better to separate them and avoid the all-encompassing “banks reconciliation” that some people attempt.

9. Multitasking during a bank reconciliation is a bad idea

Sometimes it is inevitable that you have to do a payroll or answer the phones. If it can be avoided, adding tasks to your bank rec process is generally a poor idea. Ask for help from coworkers. If you are reading this, you likely have some obstacles to reconciling bank accounts and need coworkers to step up to help remove distractions like phone calls. A computer bank reconciliation system can also reduce the negative effects of distractions by keeping the process organized.

10. Use a bank reconciliation program

I saved the best advice for last. A bank reconciliation accounting program dedicated to the task will allow you to be interrupted more often. It will automatically match transactions and provide some important discipline to your process of reconciling bank accounts. Even experts need a step-by-step process because bank recs are a linear process by nature. The bank rec program that allows the flexibility and step-by-step approach listed in these steps is ClearRec: www.clearrec.com. It will work with nearly all accounting systems and bank websites. If you have read down to this point, you are likely not enjoying a smooth bank reconciliation process. Use a tool like ClearRec that is designed to help you with a reconciliation of bank accounts.

A bank reconciliation in accounting will take its toll without a plan in place. Reconciling a bank account truly needs a careful process. Bank reconciliations accounting simply requires the discipline of an architect designing a bridge. Each step must be carefully crafted. While “diving in” has some appeal when confronted with limited time, taking appropriate steps like what I listed above can save time and create a clean audit-friendly financial accounting bank reconciliation.

ClearRec was created as a system for reconciling the bank account applying and complementing the principles listed above. The program’s bank reconciliation system uses a step-by-step approach while offering tools that experts need for quickly matching transactions. It is only with a disciplined process provided by a program like ClearRec that a modern set of problems reconciling the bank account can be efficiently solved.

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